Risk Parity Radio

This is our weekly portfolio review of the portfolios you can find at https://www.riskparityradio.com/portfoliosWe also discuss the All Seasons Portfolio in a little more depth, including why it may not be the best representative of a risk-parity style portfolio and what it is missing.The All Seasons portfolio is a reference portfolio that is modeled after Ray Dalio's All Weather portfolio and is described in "Money:  Master the Game" by Tony Robbins.  It is a very conservative portfolio that is comprised of four asset classes in five funds, allocated as follows:  30% total U.S. stock market (VTI), 40% long-term treasury bonds (TLT), 15% intermediate-term treasury bonds (VGIT) 7.5% gold (GLDM) and 7.5% commodities (PDBC).  Since 1970, it has a compounded annual growth rate (after inflation) of 5.6%, and an expected permanent safe withdrawal rate of 3.8%.  Here are the links I mentioned to theoretical risk-parity portfolios from the literature:Risk Parity Portfolios:  Efficient Portfolios Through True Diversification:  https://www.panagora.com/assets/PanAgora-Risk-Parity-Portfolios-Efficient-Portfolios-Through-True-Diversification.pdfRisk Parity:  Silver Bullet Or A Bridge Too Far:  https://www.callan.com/wp-content/uploads/2018/04/Chapter-4-from-Managing-MultiAsset-Strategies-2018.pdfSupport the show

In this episode we analyze gold as an investment using David Stein's 10 Questions to Master Investing, which are:1.  What is it?2.  Is it an investment, a speculation, or a gamble?3.  What is the upside?4.  What is the downside?5.  Who is on the other side of the trade?6.  What is the investment vehicle?7.  What does it take to be successful?8.  Who is getting a cut?9.  How does it impact your portfolio?10.  Should you invest?We also discuss several bits of financial misinformation I heard on podcasts last month about small-cap value stocks and options for improving traditional 60/40 portfolios.Links referenced in the episode:Correlation analysis of small cap value funds versus the total stock market and large cap growth:  https://www.portfoliovisualizer.com/asset-correlations?s=y&symbols=VTSMX%2C+VIGRX%2C+SLYV&timePeriod=2&tradingDays=60&months=36Analysis of gold versus the total stock market since 2005:  https://www.portfoliovisualizer.com/backtest-portfolio?s=y&timePeriod=4&startYear=1985&firstMonth=1&endYear=2020&lastMonth=12&calendarAligned=true&includeYTD=false&initialAmount=10000&annualOperation=0&annualAdjustment=0&inflationAdjusted=true&annualPercentage=0.0&frequency=4&rebalanceType=1&absoluteDeviation=6.0&relativeDeviation=0.0&showYield=false&reinvestDividends=true&portfolioNames=false&portfolioName1=Portfolio+1&portfolioName2=Portfolio+2&portfolioName3=Portfolio+3&symbol1=UPRO&symbol2=TMF&symbol3=PFF&symbol4=VGIT&symbol5=VTI&allocation5_2=100&symbol6=BND&symbol7=REET&symbol8=TLT&symbol9=GLD&allocation9_1=100Portfoliocharts porfolio analyzer (input 100% gold yourself):  https://portfoliocharts.com/portfolio/my-portfolio/Recent Portfolio Charts article about gold, gold miners, drivers and taxes:  https://portfoliocharts.com/2020/08/21/metal-money-and-the-measurable-value-of-gold/Risk parity sample portfolios page:  https://www.riskparityradio.com/portfoliosSupport the show

This is our weekly portfolio review of the portfolios you can find at: https://www.riskparityradio.com/portfoliosWe also discuss the Risk Parity Ultimate Portfolio in depth, including how it was constructed and how it compares with a classic 60/40 retirement portfolio comprised of VTI (60%) and BND (40%).The Risk Parity Ultimate is a conservative portfolio that is designed for medium and long-term needs.  It is comprised of 12 different funds in six different asset classes:  40% stock funds (split into 12.5% VUG, 12.5% VIOV, 6.25% USMV, 6.25% SPLV and 2.5% UPRO), 25% long-term treasury bond funds (split into 15% TLT, 5% EDV and 5% TMF), 12.5% preferred stock funds (PFF), 10% gold (GLDM), 10% REITs (REET) and 2.5% in a stock market volatility tracking fund (VXX).    Here is a link to the analyzer we used to compare the Risk Parity Ultimate Portfolio with a classic 60/40 retirement portfolio:  https://www.portfoliovisualizer.com/backtest-portfolioSupport the show

This is our weekly portfolio review of the portfolios you can find at: https://www.riskparityradio.com/portfoliosWe also discuss the Aggressive Fifty-Fifty Portfolio in depth, including how it was constructed and how it compares with a Total Stock Market portfolio.  Are you interested in an 80% better performance with only slightly more risk than the market?  Then lend your ear.The Aggressive Fifty-Fifty Portfolio is comprised of 33% UPRO, 33% TMF, 17% PFF and 17% VGIT.  Here is a link to the analyzer we used to compare the Aggressive Fifty Portfolio with a Total Stock Market portfolio:  https://www.portfoliovisualizer.com/backtest-portfolioSupport the show

In this episode we discuss how NOT to choose investments and how to employ a good process to analyze an investment.  We adopt the process of David Stein's 10 Questions To Master Successful Investing and apply it to PFF, an exchange-traded fund of preferred stock.Links:Investopedia Article -- "How Does Preferred Stock Work?":   https://www.investopedia.com/articles/stocks/06/preferredstock.asp#:~:text=Preferreds%20are%20issued%20with%20a,of%20the%20preferred%20shares%20falls.Ishares description of PFF:  https://www.ishares.com/us/products/239826/ishares-us-preferred-stock-etfPortfolio Visualizer's Asset Correlation Analyzer:  https://www.portfoliovisualizer.com/asset-correlations"Money for the Rest of Us:  10 Questions To Master Successful Investing":  https://moneyfortherestofus.com/how-to-invest-book/The 10 Questions To Ask When Considering An Investment:1.  What is it?2.  Is it an investment, a speculation, or a gamble?3.  What is the upside?4.  What is the downside?5.  Who is on the other side of the trade?6.  What is the investment vehicle?7.  What does it take to be successful?8.  Who is getting a cut?9.  How does it impact your portfolio?10.  Should you invest?Support the show

Dive into the latest portfolio performance reviews that reveal exciting insights! Explore the concept of the Accelerated Permanent Portfolio and its innovative four ETF components. Discover how it was adapted from Harry Browne's original strategy to enhance returns. Frank shares compelling comparisons of performance metrics against the Total Stock Market, showcasing the potential for a 50% boost with reduced risk. Plus, learn about balancing leverage and volatility for optimal returns. Don’t miss the intriguing take on projected withdrawal strategies!

In this episode we discuss how professionals construct risk-parity style portfolios, what are the basic principles for the do-it-yourself investor, and how to implement them.  The three basic principles are (1) the Holy Grail Principle; (2) the Macro-Allocation Principle; and (3) the Simplicity Principle.Here are the links mentioned in the episode:March draw-downs for professional risk-parity style portfolios: https://www.markovprocesses.com/blog/risk-parity-funds-in-the-coronavirus-market-rout/Ray Dalio explains the Holy Grail principle of risk-parity style investing: https://www.youtube.com/watch?v=Nu4lHaSh7D4Ray Dalio reveals the most basic components of most risk-parity style portfolios:https://www.youtube.com/watch?v=KA7U8xT_2DkPortfolio Visualizer Asset Correlation Calculator:  https://www.portfoliovisualizer.com/asset-correlationsPortfolio Charts Master Portfolio Analyzer:  https://portfoliocharts.com/portfolios/Support the show

This is our weekly portfolio review of the portfolios you can find at: https://www.riskparityradio.com/portfoliosWe also discuss the Golden Ratio Portfolio in depth, including how it was constructed and how it compares with the Total Stock Market and 60/40 stock/bond portfolios over the past 50 years.  Are you interested in a 30% better safe withdrawal rate?  Then lend your ear.Here is the link to the article about the Golden Ratio as mentioned in the episode:  https://en.wikipedia.org/wiki/Golden_ratioSupport the show

In this follow-up to Episode 3, we explore the development of risk-parity style investing from the 1980s to the present day.Links:The All Weather Strategy Paper:   Bridgewater Paper 2009.12 AW Info Pack.doc (granicus.com)Risk Parity Portfolios:  Efficient Portfolios Through True Diversification:  https://www.panagora.com/assets/PanAgora-Risk-Parity-Portfolios-Efficient-Portfolios-Through-True-Diversification.pdfRisk Parity:  Silver Bullet Or A Bridge Too Far: chapter-4-from-managing-multiasset-strategies-2018.pdf (callan.com)Support the show

This is our weekly portfolio review of the portfolios you can find at https://www.riskparityradio.com/portfoliosWe also discuss the Golden Butterfly Portfolio in depth.  Links to more information about the Golden Butterfly and the theory behind it:https://portfoliocharts.com/2015/09/22/catching-a-golden-butterfly/https://portfoliocharts.com/2016/04/18/the-theory-behind-the-golden-butterfly/Support the show